Heavy Duty Trucking, April 2018

HDT APRIL 2018 24 WWW TRUCKINGINFO COM Hotline TRUCKINGS MOST RESPECTED BUSINESS REPORT Watch ECONOMIC Raising federal fuel tax makes economic sense There is a lot of talk lately about increasing the amount of spending on the nations infrastructure especially for roads and bridges Report after report details why this needs to be done because our roads and bridges are crumbling and too congested and there is not enough money to pay for improvements How to pay for it however is another question Some in trucking such as the American Trucking Associations are calling for an increase in the fuel tax Of course there are opponents to this even in trucking an industry that relies on roads and bridges like no other However the simple fact is that trucking cant afford not to pay fuel taxes for road projects To begin with a little background More than 15 billion in infrastructure funding has been called for by the Trump administration while the American Society of Civil Engineers says 2 trillion is needed over the next 10 years just for roads well short of current funding levels Also the way we pay for federally funded road and bridge projects hasnt changed over the past 25 years Yep the nations gas tax is still 184 cents per gallon and diesel is at 244 cents per gallon And like everything else in this world from healthcare and groceries to new vehicles whether four wheels or 18 the cost of building and repairing roads and bridges isnt as cheap as it was in 1993 The state of the nations roads also is costing trucking a lot in terms of traffic congestion An American Transportation Research Institute study found traffic congestion added up to an increase of more than 22000 in operational costs for each truck that travels 100000 miles annually For the entire trucking industry thats 634 billion in additional operational costs One plan thats been floated is to gradually increase the fuel tax by 20 cents per gallon to raise 340 billion over the next 10 years Unfortunately thats not enough Fifty cents per gallon on the other hand would take that figure to 850 billion over a decade and thats much closer to the amount of money thats needed Opponents say trucking cant afford such a hike Yet diesel prices have increased by far greater amounts in just a matter of months and the wheels of the trucking industry kept turning And no ones calling to increase the fuel tax by that much all at once In fact this might be a perfect time for fleets to absorb a fuel tax increase Economists both inside and outside of the trucking industry are upbeat on the general condition of trucking and whats expected to come the remainder of this year Many trucking operations had a stellar 2017 In addition to seeing healthy business levels they got a hell of a holiday bonus in terms of tax reform which pushed their profits much higher and they will continue to enjoy its financial benefits The bottom line is we have a healthy economy and good freight demand some would argue the latter is among the best ever so its not a bad time to deal with a fuel tax increase At the same time trucking is plagued by delays in terms of congested highways thats costing billions of dollars and cutting into capacity to haul all that freight Economists are more mixed on the effects of infrastructure spending on the economy as a whole But if we were to use a fuel tax to pay for it rather than deficit spending it could help avoid potential problems Some economists are concerned that deficit spending even if it spurs economic growth in the short run may also cause an uptick in inflation pushing the Federal Reserve to raise interest rates faster potentially causing the economy to slow and making money more expensive to borrow You cant tell me with a straight face that now isnt a good time to invest in the nations roads and bridges and that it doesnt make economic sense Unless of course you like paying for congestion and think a dollar today goes as far as it did more than two decades ago which was the last time federal fuel taxes were increased Evan Lockridge Business Contributing Editor elockridge@ truckinginfo com Evan Lockridge covers business and economic news for HDT both in this monthly column and on Truckinginfo com A freelance writer he has been covering the trucking industry in print online and on the air since 1991 The way we pay for federally funded road and bridge projects hasnt changed over the past 25 years

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